AFCA CEO David Locke
An Australia ‘free of financial disputes’ is the new vision of AFCA.
David Locke, the AFCA chief ombudsman and CEO, launched the new vision at an AFCA member forum yesterday.
The AFCA annual review for FY2024 shows a significant increase in complaints
related to banking and finance (up 12% overall), with notable rises in online accounts (up 36%), personal transaction accounts (up 20%), credit cards (up 13%) and personal loans (up 19%).
Scams continue to be a major issue in the financial sector, accounting for a significant portion of the complaints.
Unauthorised transactions led the complaints, with 12,505 reported cases, indicating an ongoing challenge for both financial firms and consumers.
AFCA noted an 18% rise in hardship complaints, “reflecting economic challenges facing many Australians.
“Complaints often relate to lenders’ failure to adequately respond to hardship requests, and AFCA is working with the industry to improve processes and reduce the number of avoidable complaints” AFCA said.
“61% of banking and finance complaints were resolved at the registration and referral stage, indicating a continued commitment from financial firms to resolve issues early.”
But not often enough and not early enough, especially in cases of financial hardship.
“AFCA would like to see real ownership taken by financial firms to support customers experiencing financial hardship” Locke said in his opening address to the member forum.
“ASIC’s recent hardship report identified significant challenges for people in accessing financial assistance and revealed that a third of hardship applicants faced so many obstacles that they abandoned their applications altogether.
“We see this in our own complaints data, which shows insufficient support by industry for many individuals in financial difficulty. Complaints in this area were up 18% last financial year, with a substantial proportion relating to home loans.
“It is positive to see some steps lenders have taken, such as investing in specialist hardship teams and improving processes. But the increased number of complaints suggests more needs to be done.”
In 2023/24, AFCA received approximately 11,000 scam-related complaints – more than 900 a month, “and we know that is the tip of the iceberg” Locke said.
Phishing, spoofing, and remote access scams “remain widespread” the annual review says.
There has been a significant increase in bank impersonation scams, while
investment and romance scams continue to cause major financial losses. Investment scams often involve transferring funds to cryptocurrency platforms, although efforts by financial firms to restrict these transfers have had some success.
What Locke didn’t say is that when scam complaints escalate and reach the point of a (publicly available) ombudsman’s determination, AFCA practically always finds in favour of the bank.
“The Government’s draft legislation proposes a whole-of-ecosystem response to scams” Locke noted.
“This means financial firms, telecommunications companies and digital platforms will be covered by this new EDR scheme.
“This legislation will set in motion a program of work for AFCA to establish this new service. It will mean busy days ahead for AFCA.
“But as an experienced EDR scheme that currently investigates and resolves scam complaints in the financial services sector, we are well-positioned to successfully deliver on this work, not only helping victims of scams but also supporting you to improve practices through data and insights and together making Australia a destination of last resort for scammers.
“We believe both consumers and firms will benefit from having mandated internal dispute resolution mechanisms, where none currently exist, as well as access to a single ‘front door’ for external dispute resolution, where a complaint remains unresolved.”